Andhra Bank, Federal Bank, Gokaldas, Grasim, Infoedge, JSW, Maruti, SBI, Tata Tea, United Phosphorus

Andhra Bank, Federal Bank, Gokaldas, Grasim, Infoedge, JSW, Maruti, SBI, Tata Tea, United Phosphorus

Aban Offshore, Airtel, Gokaldas

Aban Offshore, Airtel, Gokaldas

Blackstone to acquire Gokaldas

The US-based Blackstone Group, a global private equity fund with $85 billion in assets under management, today agreed to acquire 50.1% stake in Bangalore-based apparel exporter Gokaldas Exports at Rs 275 per share valuing the enterprise at around Rs 1,000 crore.

Blackstone will also make an open offer for 20% shares, according to Sebi guidelines, at Rs 275 per share.

The total cost of the acquisition, including the public offer, will come to $165 million. This is one of the of the largest private investment in a public enterprise in the apparel sector.

According to Gokaldas Exports, the acquisition will help the company become a global player in the garment sector. "Blackstone is an ideal partner for us. They have a lot of investment in the textile and retail sector globally, which will help us get more partners to work with," Rajendra Hinduja, managing director, Gokaldas Exports said.

"Gokaldas is the leading company in India in an industry that has seen significant growth in the Asian region post the elimination of the garment quota regime in 2005. This favourable industry dynamic combined with our highest regard for the management team of Gokaldas Exports were key factors in our decision to enter into this partnership," Blackstone Advisors India chairman and managing director Akhil Gupta said.

Following the acquisition, Blakstone will have a representation on the board of directors while the founder-promoters would continue to lead the company with Madanlal Hinduja as chairman, Rajendra Hinduja as managing director and Dinesh Hinduja as executive director.

A part of the funds, which Blackstone will invest, is also expected to be used to finance its 400-acre, Rs 2,000 crore special economic zone at Kanakapura on the outskirts of Bangalore. A spokesperson said they were going through the process of getting approvals for this project, which is expected in the current financial year.

Gokaldas Exports, the biggest apparel exporter in the country, has 47,000 employees in 46 manufacturing facilities with a system capacity to produce and export 2.5 million garments a month. Gokaldas exports apparel to brands like Nike, Adidas, GAP, Tommy Hilfiger and Abercrombie and Fitch.

Gokaldas is now looking at tapping the domestic market as the rising rupee is hitting exporters.

ITC, Thermax, Gokaldas, IGL, Patni

UBS on ITC

ITC's FY07 cigarette growth, at 7%, was in line with our estimate, and cigarette segmental revenue growth was 13.3%, aided by an estimated 2-2.5% of weighted price increase and 3-3.5% mix improvements. Gross revenue grew 20.2%, and net revenue grew 26.3%. FY07 operating profits rose 19% YoY. PBT was up 20% but a higher tax rate caused PAT to grow by a little less (18.4%).

Our price target of Rs160 is benchmarked against 18x FY08E earnings, which is the mid-point of ITC's long-term trading band. We maintain our Neutral 2 rating.

Prabhudas Lilladher on Gokaldas Exports

Based on the revised earnings estimates of Rs 24.3 and Rs 31.0, the stock is trading at PER of 9.1x and 7.1x FY08E and FY09E respectively. We maintain our BUY rating on the stock given the attractive valuations and set a 12-month price target of Rs 291 (12.0x FY08E EPS) giving an upward return of 32%.

Man Financial on IGL

Indraprastha Gas Ltd.’s (IGL) Q4FY07 results were much ahead of our expectations with positive surprise in sales volume
• Net sales were up by 21.1% at Rs 1,643mn while net profit was up by 35.6% YoY at Rs 401mn.
• Increase in CNG and PNG volumes by 11.6% and 44.4%, respectively, boosted revenue and net profit growth
• We maintain our Buy rating on the stock and a target price of 135

Citigroup on Patni Computers

Significant outperformance — After outperforming the BSE IT index by 50% in the past 2 months, we downgrade Patni to Sell/Medium Risk. High valuations, coupled with execution risks, tilt the risk-reward profile to the downside.

Why we had upgraded the stock? — We had upgraded Patni based on thefollowing: (a) cheap valuations; and (b) it being an M&A candidate with its cheap valuations and decent size.

Target price at Rs565 — The apparent M&A premium in the current valuations,putting the stock on a par with Satyam, is difficult to justify, in our view. An upside risk remains potential M&A announcements. Our new target price is Rs565, based on a 15% discount to Satyam.

Citigroup on Thermax

Strong recurring PAT growth — Thermax reported Q407 consolidated recurring PAT of Rs668mn, up 74% YoY and 35% ahead of our expectations. Higherthan- expected revenues, EBITDA margins, other income and lower-thanexpected taxes helped boost recurring PAT growth.

Order backlog up 66% YoY, guidance positive — Thermax FY07 end order backlog was Rs36.72bn, up 66% YoY. Management has guided for more than 40% revenue growth in FY08. We await further details in the conference call to be held on May 30.

Maintain Buy (1L) — Thermax remains one of our top picks in the Electrical E quipment and Engineering space. TARGET of Rs 562

Nestle, Indraprastha Gas, IOC, CBoP, Gokaldas

ENAM recommends OUTPERFORMER on Nestle

We believe Nestlé India has a significant intrinsic value (~Rs 2056 per share) and value unlocking will unfold in stages on successful introduction of brands / products from its parent¿s global portfolio and an improvement in its existing portfolio¿s reach and affordability in the rural markets. At CMP (Rs.1143) Nestlé India is currently trading at P/E of 24x CY08E and EV/EBITDA of 14x CY08E, close to its long-term one-year forward valuations. Given the growth momentum and EBITDA margin (pre provisions) expansion in Q1CY07, we believe the company has the potential to positively surprise consensus growth expectations in the interim term. We maintain sector Outperformer rating on the stock.


ISEC recommends BUY on Indraprastha Gas

IGL reported impressive 35% YoY growth in Q4FY07 recurring net income to Rs401mn, the best ever quarterly performance. Recurring net income was 11% higher than our estimates on the back of higherthan- expected volumes and margins. The company's growth prospects are bright based on accelerated conversion of private vehicles to CNG and incremental demand of 1,000 CNG buses due to Commonwealth Games in '10. Valuations are attractive as the stock has fallen 14.1% YoY and has underperformed the BSE-200 45% in the past one year. Maintain BUY.

ISEC on Indian Oil Corporation

Indian Oil (IOC) reported recurring net income of Rs29bn in Q4FY07 as against Rs8bn in Q4FY06. The impressive 262.5% YoY growth was post pro-rata adjustment of oil bonds worth Rs65.7bn issued to IOC in Q4FY06 for full FY06. However, reported net income at Rs16.1bn was down 60.1% YoY. Overall, fall in crude prices reduced gross underrecoveries, which, along with the surprise increase in subsidy relief through upstream sharing and oil boosted IOC¿s performance. Further, the healthy outlook on refining margins and expected reforms on cooking fuel subsidies is a key positive for IOC. Added drivers include the impact of the company¿s petrochemicals business (paraxylene, PTA) and the upside from oil & gas finds from IOC¿s E&P assets. The stock rose 13.2% QoQ, outperforming the Sensex 7.7% QoQ based on the benign subsidy sharing scheme implemented by the Government. The stock is currently trading at FY07 P/E of 8.3x.

ENAM on Centurion Bank of Punjab

Our FY08 numbers take into account the LKB merger, Bank of Muscat preferential allotment and a part of warrants conversion by Sabre Capital. This will keep the reported ROE low, but the ROA will likely be maintained at 0.8%. Given that valuations at 3.6x FY09E are rich, the stock may underperform in the short term. However, along with the strong growth prospects and high execution capability, the bank is also a strong takeover candidate post 2009. Hence, valuations are
likely to remain high in the coming years. Maintaining our sector Outperformer rating on the stock.

ENAM on Indraprastha Gas

In our view, market is largely ignoring IGL¿s business franchise, itsability to manage the costs and seems to be concerned on the impactregulations. However, at current valuations (9.8x FY08E EPS), theconcerns seem to be overdone, making it one of the mostinexpensive stock in oil & gas universe. We maintain our sectorOutperformer rating on the stock.

Merrill Lynch on Gokaldas Exports

Valuations at 10x FY08E PER, look undemanding, being at the lowest end of thehistoric PE band (12-15x). However, with expectations of an earnings slowdown inFY08, these multiples may just about be right, for now. We note that impendinglabor reforms and the big domestic opportunity remain as key long term growthdrivers for Gokaldas. However, in the absence of any near term triggers and theoverhanging concern on Re appreciation, we maintain our Neutral rating

Citigroup - Gokaldas Exports, India Technicals

Citigroup - Gokaldas Exports

India Technicals

ICICIDirect: Gokaldas Exports - Initiating covering (Buy: Rs 236, Target: Rs 315)

Gokaldas Exports (GOKEXP)

Price: Rs 236 Target Price: Rs 315
OUTPERFORMER

Gokaldas Exports Ltd (GEL), India's largest garment exporter, has drawn up
an extensive roadmap for growth. It is expanding capacity by setting up
three new factories and diversifying its client and product mix. Big global
retailers are consolidating their vendor base and the company will be
optimally positioned to capitalize on the opportunity with its expanded
capacities. We initiate coverage on the stock with an OUTPERFORMER rating.

Capacity boost to aid volume growth: GEL is expanding garmenting capacity
from 24 million pieces per annum to 36 million pieces by FY09E. This will
aid volume growth and translate into revenue growth. We expect revenues to
grow at a CAGR of 15% over FY06-09E.

Diversifying into niche categories: The company is diversifying its product
mix by entering into new categories like structured suits, industrial and
work wear, innerwear and sleepwear. This foray would enable the company
improve realizations.

Strong relationship with global retailers: Renowned brands like GAP, Nike,
Sears, Marks and Spencer, and Tommy Hilfiger among others, are consolidating
their vendor base and increasing purchases from suppliers with large
integrated capacities like GEL.

Favourable policy initiatives: The company is likely to be a key beneficiary
of policy initiatives for the textiles sector like extension of Technology
Upgradation Fund Scheme (TUFS), labour law changes and setting up of
integrated textile parks.

Valuations: At the current price of Rs 236, the stock discounts its FY08E
EPS of Rs 24.99 by 9.4x and FY09E EPS of Rs 31.46 by 7.5x. On an EV/EBITDA
basis, it trades at 8.0x for FY08E and 6.7x for FY09E. Peers like Bombay
Rayon Fashions and Kewal Kiran Clothing trade at a P/E multiples of 9.6x and
9.7x their FY08E earnings. We believe the current valuations do not capture
the premium discounting that the stock deserves owing to its leadership
position and significantly higher realizations. Liquidity in the scrip has
improved after a stock split from a face value of Rs 10 to Rs 5. We value
the stock at 10x its FY09E EPS of Rs 31.46, giving us a 12-15 month price
target of Rs 315, an upside of 33% from current levels.

Download here

Gokaldas Exports: Buy

An investment can be considered in the stock of Gokaldas Exports, India's largest garment exporter. The extension of TUFS is likely to benefit companies such as Gokaldas, which are on an ongoing expansion drive. Import of fabrics is likely to be cheaper with the cut in Customs duty. The inclusion of income from its export-oriented units under the Minimum Alternate Tax may not have too adverse an impact on net margins, considering that the company already bears an effective tax rate of more than 10 per cent.

From a long-term perspective, the stock valuations are reasonably attractive. The stock trades at 10-11 times its likely FY-08 per-share earnings, assuming its expansion programme remains on track. Fresh capacities, a diversifying product and client mix and the identification of the domestic retail market as a new revenue stream would ensure that revenue growth remains in strong double-digit. Gokaldas has been fairly conservative both in its expansion strategy and growth targets. We are inclined to view this positively, however, as it limits the downside. The stock may be suitable for investors with modest return expectations of 15-20 per cent.

Capex plans

In the first nine months of this fiscal, Gokaldas invested about Rs 65 crore in expanding its facilities. Four factories came up in the third quarter in Chennai and in and around Bangalore; utilisation is likely to be ramped up over the next couple of quarters.

A plant in Mysore and a bottoms facility near Bangalore are likely to become operational in April 2007, while a unit in Hyderabad is likely to come up later this year. By the end of FY-08, Gokaldas' annual garment capacity would go up by about 25 per cent to 30 million pieces.

As Gokaldas is operating at optimum capacities, there is room for volume growth once these capacities come on stream.

Domestic retail, a new avenue

Ramping up production to full utilisation levels should not be much of a problem for Gokaldas, which recently set its eyes on the rapidly-growing domestic market as well. Gokaldas' retail initiative,

The Wearhouse, has not made much of an impact beyond the South Indian market.

Given its reputation as a quality garment exporter, the company, however, appears well-placed to capitalise on the demand from domestic retailers such as Reliance and Bharti that will be sourcing locally for their labels.

Diversifying product mix

Gokaldas has a product portfolio that is fairly untapped by other organised players, with jackets, coats, windcheaters, ski wear, sportswear forming a significant portion of its exports.

Given the fashion edge these products tend to have, Gokaldas is less vulnerable to severe price undercutting that takes place in volume-based segments such as cotton knitwear. It has, however, been diversifying its product portfolio and ramped up the contribution of trousers, chinos and other bottomwear and casual wear and babywear.

A new suits facility is likely to go on stream this quarter. Gokaldas is also in talks with an international player for a joint venture to start a apparel line. It has also diversified its customer base and appears to have made greater inroads into Europe since its public offer.

With an expanding number of customers, including those of repute, there is likely to be demand for its new products as well.

Edelweiss - Gokaldas Exports

Download here

Thanks Ashis

Motilal Oswal - Reports

Colgate Palmolive

BL Kashyap

Aurobhindo Pharma

Gokaldas Exports

GAIL

BPCL

The deluge continues :) - Thanks Ramesh